Justin began life as an entrepreneur early. At eight years old, he ran a lemonade stand.
At 14, he had amassed several paper routes, and was selling gifts from catalogues to many of his paper-route customers.
Today, he is still an independent entrepreneur.
He never needed a business credit card for his lemonade stand. He did not need a business credit card for his paper route. Nor for his catalogue gift business. But what about now?
There are some compelling reasons why even a part-time entrepreneur whose business is run from his garden shed when he gets home from his day job should have a business credit card. It might not be necessary at first, but it sure makes a lot of common sense.
The most obvious reason is to separate business and personal expenses. OK, you don’t technically need a separate business credit card to keep separate business and personal expense records, but you also don’t need to spend an hour every month trying to separate them out. A separate business credit card just makes the whole process much easier for you and saves you precious time. And save you accounting fees, since all the transaction records will be in twelve monthly statements, rather than in a shoebox your accountant will have to sort through.
When buying online for your business, you might want to buy some services for yourself and some for your business, and you might need to distinguish between the two for tax purposes. To distinguish between the two, a separate credit card account can help.
In many cases, business credit cards offer better rewards than consumer credit cards. Of course, you do need to shop around to find those with the best rewards, but those rewards can help your business profit – which is the whole idea of running a business.
As long as you pay off your balance every month, you should be searching for the credit card with the biggest rewards. So if that is a business credit card, go for it. If you carry a balance from one month to the other, a much more important factor is to get the card with the lowest interest rate. Again, if that is a business credit card (as it often is), go for it.
It gets more important…
As your business grows, all these reasons become even more compelling. Plus, you have some additional reasons that make it essential at some point to get a business credit card.
For instance, there is the matter of business credit rating. Even if you are running a part-time business out of the garden shed, you might someday want to take it full time. And then, you might someday want a business loan to expand. A business credit card can help your business establish a credit score. If you had the foresight to get a business credit card early on, you should have a well-established business credit history by the time you need it.
Chances are that you can get a higher credit limit on a business credit card – if your business has been around for a while and if your business has established a good credit history. Businesses have greater expenses than individuals, so this feature might really appeal to you.
Of course, there comes a time when your business really needs its own credit card. And that time is the moment you have employees who spend. Yes, don’t even think about giving an employee authorization to access your personal credit card. With your first employee, you are no longer a sole-proprietor freelancer; you are a business.
A business credit card makes sense for anyone running a business, full-time or part-time. You might not need one right away, but you might want one anyway. If you choose not to get one right away, keep the idea on a side-burner. If your business starts to grow, you might want to jump in fast.